China Fines Actress Fan Bingbing $70M For Tax Evasion

Beijing China : China’s most famous actress Fan Bingbing has been ordered to pay taxes and fines worth hundreds of millions of yuan (the equivalent of nearly $70 million) over tax evasion, the country’s tax authorities announced on Wednesday.

The State Taxation Administration and its Jiangsu Provincial Tax Service said that they started investigating Fan in early June after receiving information from members of the public that accused Fan of tax evasion through contract frauds.

The investigation found she had evaded about 7.3 million yuan (US$1.07 million) in personal income tax and business taxes during her work on the Chinese film “The Bombing.”

Investigators found Fan and firms of which she is legal representative to have tax arrears amounting to 248 million yuan, of which 134 million yuan was evaded.

The penalties, made in accordance with Chinese laws, were announced as follows:

Fan and the firms must pay 255 million yuan in taxes and 33 million yuan in overdue surcharge;

Fan must pay a fine of 240 million yuan for concealing real income through contract frauds and another fine of 239 million yuan for using the accounts of her studio to hide personal incomes;

The firms must pay a fine of 946,000 yuan for omitting income in accounting books to evade taxes;

One firm must pay 51 million yuan for failing to pay personal income taxes on behalf of Fan and another must pay 65 million yuan for providing illicit assistance in tax omission.

Taxation officers in Jiangsu formally issued the penalty to Fan on Sept. 30.

Fan, who received an administrative penalty due to tax evasion for the first time and has never been subject to any criminal punishment for tax evasion, will not be pursued for criminal liability if she pays back the taxes and fines within a defined time period.

The case, however, will be transferred to the police if she fails to comply.

Taxation authorities said that during their investigation, Fan’s agent, surnamed Mou, obstructed the process by instigating employees to hide and deliberately destroy accounting materials of the companies involved. Suspected of committing criminal offenses, Mou and other related personnel have been placed under compulsory measures by police investigating the case.

The State Taxation Administration has ordered its Jiangsu Provincial Tax Service to punish taxation officers who were held accountable for the tax evasion.

The authorities said other film and TV firms as well as relevant personnel that undergo self-examination and make remedial payments to taxation authorities before Dec. 31 will be exempt from administrative punishment and penalties.

In her first public statement since dropping from public view four months ago, Ms. Fan offered a contrite apology and pledged to pay the fine to avoid a criminal investigation.

“I have been through pain and suffering I have never had before,” Ms. Fan wrote in a post on Weibo, the Twitter-like website, her first since June 2. “I have had deep and profound self-reflection. I feel shamed and guilty for what I have done.”

Ms. Fan’s prominence suggests that the authorities intended to send a broader signal with the investigation. When it comes to the entertainment industry, which is heavily censored in China, the government is particularly sensitive to the influence its stars’ behavior can have — for better or worse — on public opinion.

Shortly after the inquiry began in June, the government announced that it would impose new limits on the salaries of actors, even in privately financed films. No one actor can now earn more than 70 percent of what the entire cast makes or more than 40 percent of production costs of a movie. The statement said the industry was “distorting social values” and “fostering money worship tendencies” with outsize compensation.

The State Tax Administration warned in the statement that others in the entertainment industry could also face investigations unless they stepped forward to declare untaxed income. It set a deadline of Dec. 31, promising that those who complied voluntarily would not have to pay penalties.